Nokia, Microsoft Join Forces in Smartphone Marketspace

To revitalize their respective positions in the fast changing smartphone market, Finnish cell phone giant Nokia Corp. and software giant Microsoft are joining forces to make smartphones that can potentially challenge rivals like Apple and Google (News - Alert).

In a joint press conference in London on Friday, the two titans announced plans to form a broad strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem.

“Nokia (News - Alert) and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It’s now a three-horse race,” said Stephen Elop, Nokia president and CEO.

Commenting on this Nokia-Microsoft partnership, David McQueen, principal analyst at Informa Telecoms & Media (News - Alert) said this is a “make-or-break” strategy by both Microsoft and Nokia.

He added, “There is no question that this partnership will provide scale for Microsoft which has been struggling in the mobile world since the beginning and will offer more competition, which will benefit operators (more options in terms of platforms).”

However, McQueen continued that this may not be the best move for Nokia and it is questionable how “open” Microsoft will be to work with. Even if Nokia fears Google’s dominance, an open platform like Android would allow much more possibilities to Nokia.

“Also, two losers don’t make a winner, particularly given their scale and cultural differences. It’s hard enough for massive companies to innovate on their own much less with another massive partner with a completely different culture. Whether Steve Ballmer (News - Alert) and Stephen Elop can be the white knights that the operators are looking for will depend largely on the ability for Nokia and Microsoft to execute their partnership effectively,” said McQueen.In a departure from using its own software, Nokia will work with Microsoft to integrate key assets and create completely new service offerings, while extending established products and services to new markets, according to the partners.

Under the proposed partnership, Nokia would adopt Windows Phone (News - Alert) as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.

In addition, to help drive the Windows Phone into the market, Nokia would contribute its expertise on hardware design, language support and help bring Windows Phone to a larger range of price points, market segments and geographies. Also, the two would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.

Furthermore, Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services. And Nokia Maps would be a core part of Microsoft’s mapping services.

To allow developers to easily leverage the ecosystem’s global reach, Microsoft development tools would be used to create applications to run on Nokia Windows Phones. While Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience, according to the partners.